Rs 100 and rising: onion prices surge uncontrollably

Prices of onions, a staple for most Indians, surged worryingly in Delhi ahead of the year’s main festival season, as bad weather hampered harvests and food trucks, worsening a previous shortfall and stoking trouble for a poll-bound UPA government.

In most other market centers, such as Pune and Kolkata, “modal” wholesale prices, a broad average of the day’s lowest and highest prices for a quintal (100 kg), ruled steady at between Rs 4,000 and 6,000 a quintal (Rs 40 and Rs 50 a kg). Shop-end prices varied between Rs 60 (Bangalore) and Rs 80 (Mumbai) for a kg.

India’s annual domestic demand of onion is about 12 million tonne, while in 2012-13, the total output was 16 million tonne, down 6% from the previous year. A market analyst, requesting anonymity, said traders could be holding back stocks to raise prices.

Consumers in Delhi fretted as about a nearly 50% rise in prices in about three days to touch Rs 100 a kg in some local markets, making the vegetable costlier than petrol.

The BJP-led government in Delhi had lost power in 1998 for its inability to control prices of onion – the base ingredient for most Indian meals.

Onion stocks usually bottom out during this time of the year, a seasonal phase when summer harvests are nearly exhausted and winter harvests not fully ready.

This longer monsoon this year, which resulted in prolonged showers at a time when it usually tapers off, interrupted harvest operations of the summer crop, according to RP Gupta, the director of the National Horticultural Research and Development Foundation (NHRDF). Cyclone Phailin, which hit the eastern coast earlier this month, left large parts of Andhra Pradesh flooded, holding with food trucks.

Trucks have started moving as weather has begun to clear up, Bijender Singh, the chairman NAFED, a state-run food trading agency, said.

According to NHRDF forecasts, prices are expected to decline when summer harvests roll in by November.